As the ways in which consumers may purchase goods and services using credit cards, debit cards, or other online payment mechanisms both increase in number and convenience, the opportunities for fraudulent transactions to cost merchants (and ultimately, consumers) also increases. Many merchants use one or more validation tools to attempt to identify fraudulent orders prior to completing a transaction. These validation tools may be considered part of a risk management pipeline in which an order enters the pipeline and retained revenue exits the pipeline.
After receipt of an online order, the order usually is queued for automated screening. The automated screening may immediately reject some orders, and may send other orders further down the pipeline for manual review. This manual review represents a profit leak from the pipeline in labor costs. In some cases, human reviewers may spend eight minutes of review time per order or more. Labor costs may account for over half of the typical merchant's fraud management budget.
Orders sent to manual review are either accepted or rejected; fraudulent orders that are incorrectly accepted as genuine add to fraud losses, and legitimate orders that are incorrectly flagged as fraudulent represent lost sales and potential loss of customer goodwill. Automated screening that properly invokes the manual review process for the fewest number of orders, while still correctly flagging the pool of fraudulent orders, will help plug leaks in the risk management pipeline. Similarly, better tools to aid the reviewer in the manual review process will directly lower labor costs for merchants, and increase the probabilities of accepting genuine orders and rejecting fraudulent orders.
The approaches described in this section are approaches that could be pursued, but not necessarily approaches that have been previously conceived or pursued. Therefore, unless otherwise indicated, it should not be assumed that any of the approaches described in this section qualify as prior art merely by virtue of their inclusion in this section.